OTTAWA — Canada’s annual inflation rate climbed to 2.4% in December, up from 2.2% in November, according to the latest Consumer Price Index (CPI) data released by Statistics Canada. This uptick was largely attributed to a “base-year effect” following the expiration of the federal government’s temporary GST holiday, which had lowered prices on various goods in December 2024. With those tax breaks no longer in place, year-over-year comparisons showed significant price hikes in sectors previously covered by the holiday. Specifically, the cost of restaurant meals surged by 8.5%, while grocery prices rose by 5.0%. Notable increases were seen in specific items, such as coffee (up over 30%) and fresh or frozen beef (up 16.8%). Additionally, airfare experienced a sharp monthly spike of 34.5% during the holiday travel season.
Despite the rise in the headline figure, a substantial 13.8% drop in gasoline prices acted as a critical stabilizer, preventing inflation from climbing even higher. This decline was fueled by a global oversupply of crude oil, which brought relief to consumers at the pump. The report comes at a pivotal moment as the Bank of Canada prepares for its first interest rate announcement of the year on January 28, 2026. Having maintained its benchmark interest rate at 2.25% in December, the central bank will now weigh this higher-than-expected inflation data against cooling core measures as it decides whether to hold steady or adjust its monetary policy for the coming year.
